Myths of the Coles Hill uranium deposit

By Katie Whitehead

SoVaNow.com / August 03, 2011

Almost every news story on proposed uranium mining in Virginia includes a version of the outdated refrain: “Virginia Uranium Inc. hopes to mine 119 million pounds of uranium worth as much as $10 billion.” These estimates may have been accurate in 2007 and 2008 when uranium prices soared for the first time in 30 years to around $85 per pound, so why are these numbers a myth today?

Most obvious is the fact that the price of uranium has fallen to $54 per pound and a realistic long-term price might now be $65 per pound.

Less obvious is the fact that, at lower prices, it’s not worth mining the total 119 million pounds of uranium at Coles Hill.

Some uranium deposits contain much richer ore than others. A lot of uranium ore in Canadian mines, for example, is 20 percent uranium. A ton of this ore — 2,000 pounds — contains about 400 pounds of uranium. Whether the price of uranium goes up or down, this rich ore is worth mining.

The uranium ore in Virginia, including the ore at Coles Hill, is not high-grade ore. It may or may not be worth mining, depending on the up-and-down price of uranium.

The rock of the Coles Hill deposit contains uranium in a range of concentrations. The total 119 million pounds averages 0.1 percent uranium: 1 ton of ore, on average, contains 2 pounds of uranium. The most concentrated 30 million pounds of ore at Coles Hill averages 0.22 percent uranium: 1 ton contains 4.4 pounds of uranium, almost 100 times less than the rich Canadian deposits.

Mining and processing low-grade ore is not only expensive, it creates much more waste in the form of tailings. For every 4 pounds of uranium extracted, 1,196 pounds of hazardous waste would require secure storage forever.

How much uranium would Virginia Uranium mine at current prices? Not 119 million pounds. Lower prices bring a double whammy: Less of the deposit is worth mining, and the uranium that is mined is worth less money.

Last year, the company’s consultant recommended mining about half the deposit, starting with the higher-grade ore. Using the consultant’s numbers gives an estimated total value of $3 billion to $4 billion. But that was last year.

The consultant himself noted that the Coles Hill plan “should be revisited when more accurate cost and/or price data becomes available.” An independent assessment funded by someone other than Virginia Uranium would likely result in a lower valuation.

The Energy Information Agency of the U.S. Department of Energy has summarized uranium fuel purchases by U.S. civilian nuclear power plants for the years 1994 to 2010. Even with a spike in 2007-08, prices have averaged just $45 to $50 a pound in recent years. We will have to wait to see how prices are affected by Japan’s nuclear crisis.

In addition, we need to consider that worldwide uranium exploration continues to discover new deposits. The World Nuclear Association elaborates: “The world’s present measured resources of uranium (at current prices) are enough to last for about 80 years ... . Further exploration and higher prices will certainly ... yield further resources as present ones are used up.”

Notice that the myth only mentions an upper value for the uranium at Coles Hill: It could be worth “as much as $10 billion,” but what is the range of potential value? Realistically, it could be worth as little as $1 billion; and it could become worthless — again.

For about 20 years between 1985 and 2005, none of the uranium at Coles Hill was worth mining; and lower-grade uranium mines in the American West spent more time in shutdown mode than in operation.

According to the Virginia Energy Plan, “Virginia should assess the potential value of and regulatory needs for uranium production in Pittsylvania County.” With two socioeconomic studies under way, in addition to the National Academy of Sciences study, someone should look closely at just what the Coles Hill deposit is worth — and keep looking.

The unpredictability of the uranium market offers no guarantee that Coles Hill uranium would be competitive on the open market, continue to attract private investors or justify the expense to Virginia of developing regulations and hiring enforcement staff. Regardless of whether uranium can be mined safely in Virginia, anticipated revenues and economic boom times are not assured.
(Katie Whitehead worked for the Virginia Division of Legislative Services as an information officer for the Uranium Administrative Group in 1983. She is a native and resident of Pittsylvania County.)

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